Much of the attention on this book has been focused on one of its authors' connection to the current Chancellor of the Exchequer, and what the book has to say about the role of women in business. This is a shame, because this is a well-written and important book. Important because of its analysis and conclusions, not because one of the authors once worked for George Osborne.

Matthew Hancock and Nadhim Zahawi have come together to produce a coherent and compelling analysis of what caused the financial crash, and they come to some robust conclusions about what should be done to try and prevent another disaster. Hancock and Zahawi are two of the most interesting from their intake of MPs.

Zahawi is that rare thing in modern politics – a successful entrepreneur and businessman. He co-founded YouGov and built it up into one of the most successful and high-profile UK businesses of recent times. He is also extremely genial, which makes it easy to get along with him – a surprisingly rare feature of modern politicians. Any Minister who wants to know how to encourage entrepreneurship in the UK would do well to have a chat with Zahawi.

Matt Hancock is enjoying an apparently meteoric rise through the political ranks. After a distinguished university career and a stint at the Bank, he joined George Osborne’s staff. There he helped craft and shape much of the policy of the Party through opposition and into government. Although he became an MP at the 2010 General Election, he remains close to George Osborne. For Hancock, the great political challenge he faces is to carve out some space to be able to make an impact on his own account without causing his mentor trouble.

The main points of the book are:

Politicians need to accept that people behave irrationally, and should alter the way they regulate accordingly. This would have reduced the probability of the banking crisis occurring.

Because it is hard to accurately predict how people will behave in response to a given policy measure (because they are irrational) the best solution is to build a simple regulatory framework where everybody understands where they stand, and where other people stand.

A surfeit of rules does not help prevent risky behaviour from bankers – for example, the SFA found that RBS did not break a single rule leading up to the financial crisis.

Proof that people behave irrationally is shown by the fact that financial regulatory systems were not altered in the wake of: a) Russia’s financial collapse in 1998; and b). the dot-com bubble of the early 2000s.

Because people behave irrationally, an academic obsession (based on individuals as rational actors) with building models that predict behaviour – which in turn lead to more complex regulatory systems – becomes a vicious cycle that perpetuates bad behaviour. In short, relying on false assumptions about human behaviour generates poor quality policy.

Their conclusions:

Three ways to alter behaviour of bankers which accepts their irrationality – i.e. behaving not necessarily as regulators might want them to behave – are:

More women in boardrooms – this has a calming effect on corporate culture and discourages risk-taking.

Altered pay structures – for example, the potential to claw back bonuses over future years in light of poor investments – to discourage poor risk taking.

Make people accountable for failure as they would be in other walks of life (for example a restaurant manager is held accountable even if it was a junior member of staff who gave a customer food poisoning, not the manager himself).

There can’t be any doubt that the analysis provided here clearly identifies important strands in what helped cause the economic crash. The solutions Hancock and Zahawi suggest can be seen as common sense responses to the problems they identified – although they will not be to everyone’s taste.

What they are basically saying is that business leaders should behave like sensible and responsible adults, that there should be a better balance of men and women in positions of power and responsibility, and that policy makers shouldn’t exacerbate or provoke the negative aspect of human response and instinct, but rather help create a culture where the best of people can flourish.

At the height of the recent boom in private equity, I worked for the trade body that represented that industry. It was perfectly clear, well before the crash, that Gordon Brown had created a completely unstable and unsuitable taxation and regulatory framework for the industry. He had created a policy framework designed to encourage genuine venture capital investment – a good thing. However, inside that structure had grown up a private equity industry, led by the large American buyout houses, that was using this structure to facilitate big takeovers – something Gordon Brown never envisaged or intended. It was perfectly clear this was a situation that could lead to political and economic tensions. At the time, a discussion was had with a senior official in No 10 to suggest a tightening of the regime surrounding the industry to try and cool it down. The suggestion was a non-runner – because Labour did not want to be seen at that time to be anti-business. This was one aspect of what subsequently happened – with the rest, as they say, being history.

I stand shoulder-to-shoulder with Matt and Nadhim in their hope and ambition. However, experience of the human nature – whether they be a businessman or indeed politician, journalist, priest or other – would tend to suggest that a combination of clear and firm rules, as well as encouragement and incentive, would help steady the economic ship.